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SUCK LESS. “Salesforce.com buys Instranet to make call center suck less” Source – Valleywag 9/2008. Recommendation on the Purchase of Salesforce.com. INFR 511 -Team 2 Pat Barry, Mark Fortune, Patricia Matchett , David Tinker PPMD MISST Consulting Firm Specializing in Software
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SUCK LESS “Salesforce.com buys Instranet to make call center suck less” Source – Valleywag 9/2008
Recommendation on the Purchase of Salesforce.com INFR 511 -Team 2 Pat Barry, Mark Fortune, Patricia Matchett, David Tinker PPMD MISST Consulting Firm Specializing in Software Mergers and Acquisitions
What We’ll Discuss Company Overview Mission and Values Salesforce.COM Software Corporate PURCHASES Financial Issues Weaknesses and THREATS recommendation
Salesforce.com Overview • Salesforce.com • Invented SaaS and PaaS categories • HQ in San Francisco, with offices in Asia, Europe, Australia and North America • Went Public June 2004 on NYSE • Added to S&P 500 September 2008 • Revenue $748.7 million • Operating Income $20.3 million • Net Income $18.5 million • 2,600 Employees
Mission and Values • Google • Mission - “To organize the world’s information and make it universally accessible and useful.” (2007 Google Annual Report) • Philosophy • Focus on the user and all else will follow. • It's best to do one thing really, really well. • Great just isn't good enough. • Salesforce.com • “Our mission is to help our customers solve complex business problems, including problems of scale, through more effective use of Salesforce.com ™ and the Force.com ™ platform.” • Provide business automation enhancements to maximize our clients efficiency with the use of their business software.
Purchases Source: Wikipedia • Google • Has purchased 18 companies since 1/07 totaling more than $4.0 billion • Includes software to support AdWords, Google Mobile, Google Chrome, Google Docs, Blogger, Google Maps, and Gmail. • Salesforce.com has purchased • Sendia (April 2006) for $15 million in cash– now Force.com Mobile • Kieden (August 2006) – now Salesforce for Google AdWords • Kenlet(January 2007) – Original product CrispyNews used at SalesforceIdeaExchangeand Dell IdeaStorm. Now relaunched as Salesforce Ideas. • Koral (March 2007) – now Salesforce Content • Instranet (August 2008) – for $31.5 million now rebranded to Salesforce Knowledge Base
Cost to Purchase Salesforce.com It will cost $6 -$10 billion to purchase Salesforce.com based on stock value and assets.
Salesforce.com Revenue of $748.7 MM 47,700 Customers 1,000,000+ Subscribers Market share leader of SaaS and PaaS Has had established relationship with Google since 2003 (source Gartner.com)
Financials Stock Price Google (GOOG) and Salesforce.com (CRM) Overlay with Dow Jones Index – 9/12/08 Source: finance.google.com
W&T from SWOT Analysis of Salesforce.com Weaknesses Poor brand recognition reduces ability to market product Lack of capital to put towards R&D Heavy reliance on third-party relationships and outsourcing for web-hosting facilities, hardware, and software. Still evolving business model creates uncertain future. Brief history of the company means less reliance on operating results. Threats • Loss of key personnel to competitors or other technological companies • Sarbanes-Oxley and other governmental privacy laws. • Potential security breaches similar to 2007 results in loss of trust from clients. • Competitive products from companies with greater brand name awareness such as IBM, Microsoft, Oracle.
Reasons to Not Purchase Salesforce.com • Salesforce.com doesn’t fit into Google’s philosophy. • Estimated $6 to $10 billion investment. • Payback period will take decades. • ROI is low – only 7.29%. • Well established partnership that currently creates revenue. • Weak brand recognition outside of technology circles. • Salesforce.com is dependent upon third party hardware and infrastructure. • Subscriber security breach. • Companies co-exist in geographical markets. • Only has 9% of CRM market share by revenue.
RECOMMENDATION IT is our recommendation to NOT purchase Salesforce.com at this time.